Knowledge Center

Voluntary Products and the Growth Imperative

Discovering new paths to growth is the biggest challenge for insurers today – and the biggest opportunity. In mature group markets where traditional insurance has become commoditized, innovative growth is not just advantageous, it is imperative.

Voluntary benefit products, along with associated modernization, offer a vehicle to meet this growth imperative.

A collection of cultural drivers have fueled the proliferation of group voluntary products. In the U.S., for example, supplemental health insurance sales increased an estimated 4% in 2015, marking five straight years of growth in voluntary benefits.1

And these same drivers are likely to power continued expansion:

Cost shifting – Aging populations and rising healthcare costs have led to cutbacks in employer- and state-provided benefits, creating protection gaps. In Asia, the mortality protection gap has reached an estimated $60 trillion – an alarming figure that does not even include the growing morbidity gap.2 How do markets try to fill the gaps? Higher out-of-pocket expenses for consumers.

Underinsured middle market – With limited employer-provided benefits and increasing personal debt, many middle-income families are foregoing adequate insurance. In a survey of Canadian households, roughly 30% report they carry no life insurance and 45% believe they do not have enough.3

Unique needs – One-size-fits-all programs no longer meet the needs of a diverse workforce, including employees working past the age range of employer-provided benefits. Overlooking the needs of older employees could cost British businesses £44 billion ($54 billion) through staff turnover and reduced productivity.4

Voluntary benefits offer opportunities for group insurers to take advantage of these drivers via product diversification, technological innovation, and geographic expansion.

New TechnologiesTechnology is speeding the adoption of voluntary offerings. Online platforms help increase financial literacy and the awareness of protection gaps. Decision support tools accelerate enrollment and enhance the customer journey. Wellness programs featuring wearable tech reward healthier life choices. And this is to name only a few examples.

New MarketsCost shifting and the rise of the underinsured are global phenomena, making demand for novel solutions nearly universal. Carriers once wary of global expansion are now using innovation in voluntary covers and distribution platforms as a gateway to untapped markets. Voluntary benefits’ intrinsic customizability allows for easy implementation across geographies.

The rise of voluntary benefit platforms shows no signs of slowing down. A growing number of our client partners at RGA are working with us to develop innovative and sustainable voluntary solutions. Winners will be those providers who take a proactive approach to using voluntary benefits to help address rapidly evolving individual insurance needs.

The Author

Summary

Discovering new paths to growth is the biggest challenge for insurers today – and the biggest opportunity. Voluntary benefit products, along with associated modernization, offer a vehicle to meet this growth imperative.

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Reinsurance Group of America, Incorporated is a leader in the global life reinsurance industry. With headquarters in St. Louis, Missouri and operations around the world, RGA delivers expert solutions in individual life reinsurance, individual living benefits reinsurance, group reinsurance, financial solutions, facultative underwriting and product development.